After almost 3 years of Zero Covid Policy, China is now changing its strategy to avoid jeopardizing its economy.
After dropping its Zero Covid policy in mid-December, the mainland is reopening its borders and has dropped quarantine for inbound travelers since January 8th. At the moment, the biggest impact is being seen with Chinese residents now being able to travel abroad and return without quarantine, rather than an increased issuing of tourist visas for foreign visitors to China.
Screenshot from South China Morning Post.
Since January 8th, only a negative PCR test is required 48hrs before entering China.
Hong Kong has also canceled its strict COVID rules today, no more PCR tests for arrivals and vaccine passes across the city.
Although, these sudden changes resulted in massive Covid waves across the country. This was predictable and should last until China achieves sufficient herd immunity.
Let’s hope the Chinese New Year will not be ruined by surging Covid cases. Pre-CNY sales are being monitored and will play a big role in the behavior of chinese market players.
Anyway, we finally come to a new chapter in China.
2023 will signal the resumption of imports in many sectors and therefore a stabilization of the supply chain that has been greatly disrupted in recent months. The strict nature of the anti-Covid measures and the possibility of new restrictions being implemented at any time have deterred a lot of companies from investing in or opening new locations China.
We have seen the on-trade sector shrink drastically in 2022 with repetitive lockdowns but this tough time is behind us, and now is the ideal moment to prepare for new opportunities.
2023 is going to be characterized by revenge spending.
For instance, data from Chinese online travel companies show that international ticket searches are booming (LY.com saw an 850% increase).
After “revenge travelling” we should see an increase also in revenge spending in bars, hotels, restaurants, clubs, etc.
The reopening of catering and related foodservice businesses will drive sales, so this year is full of promise and is eagerly welcomed by all the major wine- and spirits-exporting countries.
Indeed, imported wines are mainly distributed via on-trade channels.
Wineries around the world are ready to take on this anticipated increased demand in 2023. At the same time, most foreign-owned wine producers have limited options for entering the China market or growing there. We are going to explain the four main alternatives for China market expansion in 2023, the Year of the Rabbit, which also happens to be a great time to focus on China, as it re-opens.
4 main alternatives to expand in China in 2023:
• Set-up an entity:
Costly and time consuming. It makes sense if you have substantial business (over $5 million/year). Managing accountancy, HR, payroll and understanding local labor law is challenging and time consuming. However, you can outsource all these tasks to a local partner in order to concentrate on your core business of selling wine.
• Send someone from HQ to visit China on business trips:
This is costly and still very difficult for non-resident visitors to China, as Beijing has not been clear about when it will resume issuing tourist visas. Save some kerosene and be efficient with the 2 remaining alternatives below.
• Hire a Professional Employer Organization (PEO):
PEO like INS Global can manage all end-to-end Human Resources functions, including compliance, recruitment, and retention. This turnkey option enables you as the winemaker to test the waters in China with significantly less risk.
Indeed, INS Global offer to setup a physical presence in China, hire and pay staff, and grow your operation there compliantly, all without you or your team needing to actually travel to China to implement everything. They have a decade-long track record on the ground in China, to help you get everything setup in days.
• Work with a winery representative already based in China:
Working with an experienced representative, who already has a network of importers and market understanding can save a lot and avoid plenty of issues.
You can reach benjamin@yourwinerep.com for further information.
We strongly believe that the last 2 options are the most relevant so far.
To learn more about INS Global and PEO services please visit their website here, or contact koren.eloul@ins-global.com.
